Correlation Between McDonalds and Snipp Interactive
Can any of the company-specific risk be diversified away by investing in both McDonalds and Snipp Interactive at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining McDonalds and Snipp Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Snipp Interactive, you can compare the effects of market volatilities on McDonalds and Snipp Interactive and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in McDonalds with a short position of Snipp Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Snipp Interactive.
Diversification Opportunities for McDonalds and Snipp Interactive
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McDonalds and Snipp is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Snipp Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snipp Interactive and McDonalds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on McDonalds are associated (or correlated) with Snipp Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snipp Interactive has no effect on the direction of McDonalds i.e., McDonalds and Snipp Interactive go up and down completely randomly.
Pair Corralation between McDonalds and Snipp Interactive
Considering the 90-day investment horizon McDonalds is expected to generate 1.23 times less return on investment than Snipp Interactive. But when comparing it to its historical volatility, McDonalds is 6.21 times less risky than Snipp Interactive. It trades about 0.03 of its potential returns per unit of risk. Snipp Interactive is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Snipp Interactive on August 27, 2024 and sell it today you would lose (5.00) from holding Snipp Interactive or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McDonalds vs. Snipp Interactive
Performance |
| Timeline |
| McDonalds |
| Snipp Interactive |
McDonalds and Snipp Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Snipp Interactive
The main advantage of trading using opposite McDonalds and Snipp Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Snipp Interactive can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Snipp Interactive will offset losses from the drop in Snipp Interactive's long position.| McDonalds vs. Chipotle Mexican Grill | McDonalds vs. Dutch Bros | McDonalds vs. Dominos Pizza | McDonalds vs. Yum Brands |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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